International Search Funds - 2022: Selected Observations
Lenka Kolarova, Peter Kelly, Jan Simon, Rob Johnson. (2022)
IESE ST-629-E, 32 pp
Dated October 2022; data as of December 31, 2021. Sample: "211 first-time search funds ... from 34 countries on five continents" (p7); excludes "self-funded searches, second-time search funds, and single-sponsor searches" and "derived models, such as accelerators, entrepreneurs in residence, and other hybrid models", with an explicit warning against "extrapolating conclusions from traditional search funds and applying them to other forms or models" (p9). Status: 79 searching; "Of the 132 others, 94 had acquired a company, 24 had ended their search without an acquisition, and 14 had deviated" (p10). Returns: "Of the 118 eligible funds ... 93 were included" (24 unsuccessful searches, 69 acquisitions); "international search funds achieved an ROI of 1.9x and an IRR of 19.4%. The median search fund returned 1.1x ... the top-performing search fund returned 21.7x" (p16); median acquisition "purchase price of $11 million ... purchase price to EBITDA multiple of 5.8x". Only 12 positive exits and four failures to date, so "it is too early to draw firm conclusions" (p16).